UK tech expansion deals reach 10-year peak

14 Jul 2014

In a short period of over a month, the UK tech landscape has been spotlighted as a major hub of tech acquisitions and venture capital, led by its glistening capital. Indeed, London corporate finance has been boosted by both the Tech Week initiative and Google’s announcement of its VC arm launch in the city. It comes as further good news then that the UK is riding a peak of tech financing. According to industry analysis, the total volume of deals in the first half of 2014 has reached its highest level since the first half of 2002, with 50 transactions being completed in total. At a combined £238 million, these transactions amounted to the second highest 2H aggregated value across the 10-year period, with the second half of 2013 seeing the largest total at £315 million.

The reasons behind this peak are numerous. In part, it is down to London’s growing tech scene. That growth is being driven by a combination of increased government support; attention from international internet giants, a handful of early start-up successes; a growing venture capital ecosystem; an adjacent London financial sector that is beginning to take notice of tech; and an early adopter city that is similar to San Francisco, which allows Silicon Valley’s start-ups to access some of the world’s most engaged beta testers.

These factors are translating into a healthy and attractive digital economy. According to a report by Silicon Valley Bank, some 51% of UK entrepreneurs said they had successfully raised equity capital in 2013. US investors are increasingly looking to UK tech assets, where competition is somewhat lower and valuations are far more reasonable. In other words, more VC funds are searching for cheap purchases and investments outside of the US. This should certainly play into the hands of savvy business transfer agents, as they are able to search out local talent and connect clients with the big investors.

The UK and London still has some way to go though, despite riding a wave of optimism as Europe’s premier digital hub. The biggest homegrown startups, like game company Mind Candy, on-demand ride start-up Hailo, social chat platform Badoo, and music recognition company Shazam are not top global brands yet and, perhaps more importantly, have not created a wave of high-net-worth VPs like Silicon Valley internet firms Facebook, Google and PayPal did. After all, the creation of wealth through these Silicon Valley web exits delivered the next wave of founders.

Nonetheless, the outlook for the UK tech investment landscape is positive, with an increasingly broad market for entrepreneurial capital, as VCs, angels and corporates compete against investors not traditionally associated with tech.

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